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Calif.: Flurry of Employment-Law Changes Greets HR in 2015

California HR professionals already have a lot of state-specific details they need to understand. This year, many new laws are taking effect, and employers are grappling with a flurry of court rulings and regulatory activity from 2014.

To help clarify the changes, the California Chamber of Commerce provided an overview in Long Beach on Jan. 14, 2015–one in a series of seminars being held statewide this month.

Be Ready for Paid Sick Leave

One law that has received a lot of attention is Assembly Bill (A.B.) 1522, a complicated law that has generated much confusion among employers. The law mandates three paid sick days annually, at a minimum, for eligible workers.

Ellen Savage, an advisor for the chamber’s Labor Law Helpline, described the law as “very broad.” It applies to employees who have worked in the state for at least 30 days. The legislation includes a 90-day probationary period, Savage noted. A person must work at least 90 days for an employer before beingeligible to take paid sick leave, according to FAQs from the state website.

The law’s posting requirements for employers went into effect on Jan. 1, 2015. Companies must display a poster in the workplace, informing workers of their rights under the law.

But the bulk of the law–including accrual of paid sick leave, and use of available paid sick leave–will take effect on July 1.

There are three options for providing the paid sick leave to employees. One is the accrual method, in which the worker earns one hour of leave for every 30 hours worked. This would amount to slightly more than eight days annually for a full-time worker, but companies can limit the amount of paid sick leave actually taken in the year to three days, according to the FAQs. Accrued but unused time is carried over to the following year, though a business may cap this amount at 48 hours or six days.

A second option is the lump-sum method. With this approach, the employer gives workers three days of paid sick leave to use anytime during the year (keeping in mind the 90-day probationary period for new hires). It’s a “use it or lose it” method, according to Savage. But, she said, there’s a potential drawback: If employees know they’re going to lose any unused paid sick days on July 1, many of them might call in sick on the three days before that date.

The third method is an “existing employer” paid-leave option, which Savage described as convoluted. Under this option, companies wouldn’t have to offer an additional three days of paid sick leave, if their existing paid-time-off policy allows the use of paid sick leave for the same purposes and conditions in the law, and if the policy meets certain other requirements.

Workers eligible for paid sick leave can use those days for their own medical needs or to care for a family member. In addition, the law offers paid sick leave for survivors of domestic violence, sexual assault or stalking.

An eligible employee may make a written or oral request for paid sick leave, according to the chamber. The law prohibits retaliation or discrimination against workers who request or use paid sick leave.

As for the payment amount, hourly employees will receive their regular rate, but the rate for exempt employees is unclear at this point, Savage said. If a worker’s pay fluctuates during the preceding 90 days of employment, then pay is calculated using a special formula.

Although the law applies to most types of workers, there are a few narrow exceptions. The legislation exempts providers of in-home support services, certain employees of air carriers, and workers covered by collective bargaining agreements that meet specific criteria.

Other Laws Taking Effect in 2015

Although the paid-sick-leave legislation drew a lot of interest at the Long Beach seminar, many other laws also were discussed. They include:

A.B. 1897, which increases liability for certain employers that use staffing agencies. Under the law, the parties can be jointly liable for wage violations or failure to provide workers’ compensation. To minimize liability, employers should examine any contracts with staffing agencies, said Erika Frank, the chamber’s general counsel and vice president of legal affairs. Then make sure the contract includes an indemnification provision, which would protect the employer if the staffing agency fails to make payments or to provide workers’ compensation, according to Frank. If possible, work with legal counsel on this.

A.B. 60, which makes undocumented immigrants eligible for special driver’s licenses. Frank emphasized that these licenses are not to be used for I-9 verification of employment eligibility.

A.B. 1660, which provides more protections for undocumented immigrants with these special driver’s licenses. The legislation amends the state Fair Employment and Housing Act, making it a violation to discriminate against these license holders. Employers can’t require someone to present a driver’s license, unless it’s for certain specified reasons. If an employer does obtain driver’s license information, the company must treat it as private and confidential. If a business has a valid reason for obtaining this information, Frank recommends keeping it in a separate file, rather than in personnel files.

A.B. 2053, which adds new requirements for sexual-harassment-prevention training. Under another law, A.B. 1825, certain businesses must provide supervisors with at least two hours of this training every two years. Now, A.B. 2053 mandates that these businesses provide an additional component: training on preventing “abusive conduct,” which may include repeated verbal abuse and other behaviors.

A.B. 1792, which provides various protections to recipients of public assistance programs. As part of the law, employers may not discriminate or retaliate against a worker who enrolls in one of these programs. Beginning next year, the state also will release an annual report listing the 500 employers in California with the greatest number of workers enrolled in Medi-Cal. Some have called this the “list of shame.”

A.B. 1852, requiring companies that provide services to minors to notify parents or guardians about their employee background check policies. This applies to businesses, like academic tutoring companies, that provide extracurricular programs and meet other criteria. It’s sufficient for these businesses to post this information on their websites, Frank said.

Court Cases

Meanwhile, a number of 2014 court rulings will have major implications for California employers. Among the issues and cases discussed at the seminar:

*Independent Contractor Classification. The question of whether workers should be classified as employees or independent contractors was at issue in Ruiz v. Affinity Logistics Corp. and in Ayala v. Antelope Valley Newspapers Inc. In these cases, the plaintiffs alleged they were misclassified as independent contractors, depriving them of important benefits. In Ruiz, the 9th U.S. Circuit Court of Appeals held that furniture-delivery drivers should be classified as employees, not contractors. And in the Ayala case, the plaintiffs won a victory when the California Supreme Court ruled last summer. The two cases highlight the issue of an employer’s “right to control,” and they reinforce the need for caution when classifying workers, Savage said.

*Off-the-Clock Work. In Jong v. Kaiser Foundation Health Plan Inc., a former pharmacy manager brought a class action, alleging failure to pay overtime for time worked off the clock. The former manager had performed this type of work despite the fact that his employer had a policy that prohibited this. The California Court of Appeal ruled in favor of Kaiser, finding there was no evidence that the employer was aware of the unreported overtime hours. The case demonstrates the need for clear, written policies on off-the-clock work, according to Savage.

*Franchisor Liability in Sexual Harassment Cases. In Patterson v. Domino’s Pizza LLC, a former employee of a Domino’s pizza store filed a sexual harassment suit against the franchisee, franchisor and her former supervisor. She alleged that her supervisor harassed her, and she tried to hold the franchisor “vicariously liable.” The California Supreme Court ruled that the franchisor–which Frank calls the “mother ship”–wasn’t liable, finding that it had no control over the franchisee’s day-to-day operations.

Regulatory Activity

Last year was also a busy one for the Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB). Here are a few of their most important activities in 2014:

Wellness Programs. One priority for the EEOC has been ensuring that companies’ wellness programs are in fact voluntary. The federal agency has sued some employers over this issue, and Frank said that businesses should ensure that their programs are truly voluntary.

Use of Employer E-mail During Nonworking Time. In a ruling last month, the NLRB addressed the rights of workers under Section 7 of the National Labor Relations Act to discuss terms and conditions of employment. In a controversial decision, the federal agency determined that “employee use of e-mail for statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to their e-mail systems.” The case is Purple Communications Inc. and Communications Workers of America, AFL-CIO.

Joint Employer. The NLRB also upset the business community in cases involving the franchisor-franchisee relationship. The agency determined that McDonald’s USA can be held jointly liable–along with the franchisee–in dozens of cases alleging labor violations. Frank said this decision has huge implications for employers, and she expects that the case eventually will go to the U.S. Supreme Court.